When is a Statutory Audit Required for a Limited Company?

In the UK, a statutory audit is generally required for limited companies if they meet two out of three key criteria for two consecutive years:

The Criteria:

1. Annual Turnover: Exceeding £10.2 million.
2. Balance Sheet Total: Exceeding £5.1 million.
3. Number of Employees: More than 50 employees on average during the financial year.

Important to Note:

• If your company breaches these thresholds in the first year, an audit is not immediately required. However, if the thresholds are still breached in the second year, a statutory audit becomes mandatory.

• Exceptions: Public interest entities, like companies listed on a stock exchange, banks, and insurance companies, must have an audit regardless of size, from the start.
• Shareholder Request: Shareholders owning at least 10% of the company’s shares can request an audit, even if the company does not meet the above thresholds.

Why It Matters: Understanding when an audit is required ensures you stay compliant with UK regulations and helps maintain transparency and trust with stakeholders.